Re: {LONGTERMINVESTORS} HDFC..New thread..
RAJESH DESAI
Security-wise Delivery Position (30AUG2012)- Hdfc - Delivery based buying seen
| Quantity Traded | 1,48,00,293 |
| Deliverable Quantity (gross across client level) | 1,17,62,097 |
| % of Deliverable Quantity to Traded Quantity | 79.47 % |
I had applied for shares surrendering the warrants in the last week of July and the shares were credited in my demat account after one week. I had checked the demat number twice as I was informed at the counter to be careful in writing the account number where I held the warrants.
On Wed, Aug 29, 2012 at 4:00 PM, RAJESH DESAI <stock...@gmail.com> wrote:The shares will be credited only on the next day of realisation of cheque. In case of an outstation cheque being given by you, it may take a longer time.
--
CA. Rajesh Desai
--
CA. Rajesh Desai
RAJESH DESAI
HDFC said to plan as much as 5b rupee 3-yr bond sale.
Mind boggling delivery taken in HDFC
Security-wise Delivery Position (31AUG2012)
Quantity Traded 2,00,84,290
Deliverable Quantity (gross across client level)
1,61,53,619
% of Deliverable Quantity to Traded Quantity
80.43 %
--
CA. Rajesh Desai
RAJESH DESAI
--
CA. Rajesh Desai
RAJESH DESAI
| Allotment of shares pursuant to exchange of Warrants | 09/06/12 17:51 | |
| Housing
Development Finance Corporation Ltd has informed BSE that the
Corporation on September 06, 2012 allotted 8,41,300 equity shares of Rs.
2 each pursuant to exchange of 8,41,300 Warrants by 73 Warrant holders
of the Corporation. Further the Company inform that the Corporation has extinguished the said 8,41,300 Warrants. Post the above allotment, the paid-up equity share capital of the Corporation would stand at Rs. 307,61,05,540 consisting of 153,80,52,770 equity shares of Rs. 2 each |
--
CA. Rajesh Desai
RAJESH DESAI
HDFC warrant-holders net 122% return on conversion
MUMBAI: The largest mortgage player HDFC on Monday converted Rs 3,285 crore worth warrants, which were issued in August 2009 into equity shares with the investors making a windfall profit of around 122 per cent per unit.In August 2009, HDFC had issued warrants with non-convertible debentures (NCDs) of Rs 10 lakh each, to qualified institutional buyers, the lender said today.
The issue, comprising zero coupon NCDs aggregated to Rs 4,000 crore. Out of this Rs 2,000 crore NCDs were redeemed in August 2011 and the balance Rs 2,000 crore were redeemed on August 24 this year, it said.
Pursuant to the exchange of the warrants, the Corporation issued and allotted 5,47,43,150 equity shares of Rs 2 each and realised an amount of Rs 3,284.59 crore, representing 99.95 per cent of the warrants issued.
HDFC shares closed 1.2 per cent up at Rs 739.65 on the BSE whose main gauge Sensex closed flat with a positive bias of 17 points today. The conversion date was fixed on August 24, 2012 when its share price was Rs 723.
HDFC had issued these warrants at Rs 55 apiece three years ago, and going by the current stock price, the warrants have offered investors nearly 121.8 per cent return on conversion- much higher than a 13 per cent rise in the Sensex during the period, the bank said.
In August 2009, HDFC had issued over 1 crore warrants at Rs 275 each and the conversion price was fixed at Rs 3,000 based on the then face value of Rs 10 per share. Subsequently, it split the Rs 10 stock into five shares of Rs 2 each after which the number of warrants rose to Rs 5.5 crore while issue and conversion prices were adjusted to Rs 55 and Rs 600, respectively.
The warrant holders had the alternative to exercise the conversion option within three years from the date of the allotment. As of date, the paid-up equity share capital of HDFC is Rs 307.61 crore and the balance in securities premium account stands at Rs 9,297.14 crore, the lender said.
The issue was the first-ever composite issue of NCDs with warrants by any company in Asia, excluding Japan, which was offered to and fully subscribed by domestic institutional investors, the bank said in a statement today. The proceeds of the said zero coupon NCDs were utilised to subscribe to the preferential allotment of equity shares offered by its sister concern HDFC Bank.
In terms of the said issue, every warrant-holder had a right to exchange the said warrants with one equity share of Rs 2 each of HDFC, on payment of Rs 600 per equity share and the last date for submission of the warrant exchange forms with the prescribed documents and consideration amount was August 24, 2012.
The proceeds from the warrant exchange will be used to replace the zero coupon bonds and consequently the Corporation will not earn any additional interest income on the amounts raised, it added.
--
CA. Rajesh Desai
RAJESH DESAI
HDFC announces the successful conversion of Warrants with equity shares
In August 2009, HDFC had made a composite issue of Warrants with Non-Convertible Debentures (NCDs) of ` 10 lacs each, to Qualified Institutional Buyers (QIBs) on a Qualified Institutions Placement (QIP) basis, in accordance with the provisions of Chapter XIII-A of SEBI (Disclosure and Investor Protection) Guidelines, 2000 (since repealed).
It was the first ever composite issue of NCDs with Warrants by any company in Asia [ex-Japan], which was offered to and fully subscribed by domestic institutional investors.
In terms of the said issue, HDFC issued Zero Coupon NCDs aggregating to ` 4,000 crores, out of which NCDs worth ` 2,000 crores were redeemed in August 2011 and the balance ` 2,000 crores were redeemed in August 2012. The proceeds of the said Zero Coupon NCDs were utilized to subscribe to the preferential allotment of equity shares offered by HDFC Bank Limited.
In terms of the said issue, every Warrant holder had a right to exchange the said Warrants with one equity share of ` 2 each of HDFC, on payment of ` 600 per equity share and the last date for submission of the Warrant Exchange Forms with the prescribed documents and consideration amount was Friday, August 24, 2012.
Pursuant to the exchange of the Warrants, the Corporation issued and allotted 5,47,43,150 equity shares of ` 2 each and realised an amount of ` 3,284.59 crores, representing 99.95% of the Warrants issued. As of date, the paid-up equity share capital of HDFC is ` 307.61 crores and the balance in securities premium account stands at ` 9,297.14 crores
The proceeds from the exchange of Warrants will be utilized to replace the Zero Coupon Bonds and consequently the Corporation will not earn any additional interest income on the amounts raised.
Mumbai
September 10, 2012
--
CA. Rajesh Desai
RAJESH DESAI
HDFC at yearly high...Housing Development Finance Corporation rose after the firm said it has allotted 5.47 crore equity shares at Rs 600 per share & realised an amount of Rs 3284.59 crore, representing 99.95% of the warrants issued.
The company made this announcement after market hours on Monday, 10 September 2012.
Cheers!
--
CA. Rajesh Desai
RAJESH DESAI
HDFC shares fall 5% on Carlyle exit
India's top mortgage lender Housing Development Finance Corp fell 1.7 percent in pre-open trade as US private equity firm Carlyle Group is set to sell a 3.7 percent stake to raise as much as USD 861 million, according to a term sheet.
India's top mortgage lender Housing Development Finance Corp fell 1.7 percent in pre-open trade as US private equity firm Carlyle Group is set to sell a 3.7 percent stake to raise as much as USD 861 million, according to a term sheet.
The US fund, which currently holds its stake in HDFC through its arm CMP Asia, has mandated Citigroup's India arm to offload 5.7 crore shares through block deals at a price of Rs 760-781 per share.
Speaking to CNBC-TV18, Keki Mistry, VC & CEO of HDFC said he was aware of Carlyle's exit plans. "We have seen fairly strong interest in the HDFC block," he said.
Mistry said about 50 long-only investors have participated in the deal so far and over 50% of the block has been sold to foreign investors.
Below is the edited transcript of Mistry’s interview with CNBC-TV18.
Q: Can you confirm this stake sell by Carlyle, who has been the major buyer and which are the big funds that have evinced interest this time around?
A: We will get to know the details only when the shares are registered with us, but my understanding from talking to the market players is that there has been a fairly strong interest in the deal. There are number of investors - 40-50 odd investors, it is not one or two so it is very widely dispersed.
Most of these are long-only investors, some are domestic, some are international and most of them are long-term FII investors. We will have to wait to get the final details from the registrar as to who these buyers are.
Q: Do have some idea as to how much of the percentage of the shares went to FIIs or foreign funds and how much went to domestic?
A: I am not exactly sure of what it is; my understanding is it will be about 50 percent or more than 50 percent that could have gone to foreign funds.
Q: This is the second stake sell by Carlyle this year after January, do you think they would look to exit their complete stake?
A: Carlyle is a private equity fund. It is not an FII and therefore Carlyle’s investment has a limited life.
Q: You were telling us about this stake sell, has Carlyle exited completely?
A: Yes. Carlyle has exited completely. Carlyle is a private equity fund, it is not an FII and therefore this fund has a limited life. At an appropriate time, they would necessarily exit from a company. When they spoke to us yesterday afternoon, we had only three requests to them, one is that when you sell your shares, leave something on the table for a due investor, so there is an incentive for a new investor.
Second is that when you sell please sell everything lock, stock and barrel, so do not leave something behind to create an overhang in future. Third is to try and place the shares with long-only investors, so that gives a lot more stability in terms of the holding power of the purchaser. From what I understand, all these three conditions, all these three requests have been met.
--
CA. Rajesh Desai
RAJESH DESAI
No crash, only a correction in real estate: Keki Mistry, VC and MD, HDFC
The largest mortgage lender in the country HDFC is hopeful of achieving 19% growth this year, with housing loan as a proportion of GDP being at 8% against 20% in China. In an interview with The Economic Times, Keki Mistry, the company's VC and MD, said that though there could be some correction in real estate prices, it would not collapse. Excerpts:Do you think high interest rates are holding back people from buying homes and affecting the mortgage market?
For the middle class, interest rates do not determine, affordability does. There are tax benefits on housing loans and repayment of housing loans is one of the avenues of saving tax. Total outstanding housing loan as a proportion to GDP is close to 80% in the US. But in emerging markets like China, it is 20%. In India, the total housing loan as a proportion to GDP is only 8%. We are talking of doubling it to 16% in 10 years. Saturation level for India is still very far away and our pace of business will continue to grow at 18-20% a year for a long time. Another factor that will determine high growth is demographics. We know India is a young country where 60% of population is less than 30 years. People think of buying a house and taking a loan when they are in their mid-thirties. Affordability is 4 to 5 times of their annual income.
There are not too many properties within Mumbai limits. Most of the demand is coming from Navi Mumbai and Kalyan area. Only Mumbai has variations like this where property prices could range from 3,000 a square feet in Virar to Rs 1 lakh a square feet in South Mumbai.
What is the competitive strength of HDFC?
We have core competence about the housing market: for us, housing is the only business. In the 90s, banks were aggressively getting into housing. We realised that we have to keep the cost low. We are operating at a cost-to-income ratio of 7.6%, compared to 30% for most banks. For us, asset quality has been very important. Our total loan loss has been 0.04% from the time we started writing business in 1977. We have four objectives: our return to equity must rise every year, cost-income ratio should be lower, NPAs should come down, and we should grow at a pace that we have set for ourselves.
What is your view on real estate prices in Mumbai?
I don't see any big collapse. Price of a product is the function of demand and supply. There is some correction in some places. The infrastructure in the city has to improve, with sea on three sides, sewage and healthcare. For a customer buying a house, the confidence comes from a steady job. If demand slows down significantly, prices will come down in big cities like Mumbai or Delhi. For a city like Mumbai, demand for a house is always going to be there. But transport has to be eased either through the coastal road or through bridges. Water, power, schooling, healthcare are relatively easier to solve than transportation. Housing in Mumbai is expensive. If you go to smaller cities, it's affordable.
You spoke of supply being short but inventories high?
What used to happen 7-8 years ago - builder announced projects with minimum tenure - have changed now. People saw delays happening in 2008. Now, they want to see a structure in place.
Is the average loan ticket size going up every year?
We have seen average ticket size going up: it ranges between 8% and 12%. Our average ticket size for new loan is Rs 21.4 lakh and the average price of a house is Rs 33 lakh. Mumbai used to be our biggest centre but now it has slipped to number 3. Today, Delhi NCR is No 1, Chennai is No 2, Pune 4 and Bangalore 5.
Do you see competition from banks?
We saw aggressive competition from a large bank two years ago when it came up with lower interest rate products. There was competition from other private and foreign banks in early 2000. Housing loans in the system grew by 14.7% but our growth was 19%. We have never been in the market share game.
Has there been a rise in defaults?
We have seen 30 consecutive quarters decline in non performing loans (NPLs) vis-a-vis same quarter previous year. We are seeing 1-2 basis points decline in NPLs. Our total non-performing level is 77 basis points fully provided for. Our NPLs are 0.79 and loan loss 0.04% cumulatively over 35 years. We recognise the fact that we are lending to middle class and the loan can stretch for 10-12 years.
Do you think inefficiency of banks will help HDFC grow?
Efficiency levels have changed over time. In the 90s, if you wanted to place a deposit, it used to take three months to get deposit receipts. It has changed a lot.
After RBI banned pre-payment charges on loan closure, do you see people switching loans?
Indians are debt-averse and that's why they come early and pay. In the past 10 years, 10-14% loans were prepaid either in full or in part. For the year ended March 2012, when charges were abolished, 12% went up to 13%. It is not a common phenomenon.
What proportion of housing is funded by bank loans?
In urban areas, a very significant part of over 80% is funded out of loans.
If you want to buy house from the secondary market, there's always a cash element?
Everyone knows there's a cash element. But over the past 20 years, the cash element has come down. There was a section in Income Tax, which gave tax authorities the right to acquire a house if they thought there was an under valuation. This section was deleted. Today, you can buy property anywhere in the country with cash payment.
Are you funding the builders?
Builders are making good margins, but not fancy margins. Builders are making not more than 15-20%. We are financing projects only for construction. All cash flow from sales of units in the project is escrowed, which ensures that HDFC gets the money.
Since the 2008 crisis, how has the builder community adapted to the squeeze in funding?
2008 was tough - things have not been so bad since then. The previous year was euphoric and every investment banker would suggest builders to do an IPO. They were building a large land bank. In those days, builders went for high-end apartments. Post Lehman, most builders have recognised that for every high-end project they also do one mid-income project. So, in difficult times, when the high-end projects may not sell, the low-end ones would. That's one change. The second change is that developers have stopped going on a land buying spree.
HDFC stock looks interesting on chart and here’s why
HDFC Chart
HDFC broke out on Sep 10 2011 from trading range between 610 and 740.
Post breakout – HDFC rallied from 740 to 790+ before stock started pulling back. The stock as of yesterday closed at 741 just above 50 dma of 735.
Trading Strategy
The current level of 735-742 looks like an excellent place to accumulate the stock with target price of 870. It means an upside of 17%. The stop loss should be placed below 730 on closing basis.
Two other stocks that bulls can bank on: TCS and Cipla
Please do your own due diligence before trading
--
CA. Rajesh Desai
RAJESH DESAI
--
CA. Rajesh Desai
RAJESH DESAI
--
CA. Rajesh Desai
RAJESH DESAI
CA. Rajesh Desai
Rajesh Desai
CA. Rajesh Desai
Rajesh Desai
Press Release
FINANCIAL RESULTS FOR THE PERIOD APRIL TO DECEMBER, 2012:
STANDALONE & CONSOLIDATED
Performance Highlights
- 24% increase in the consolidated profit after tax to ` 4,556.59 crores for the nine months ended December 31, 2012
- 18% increase in the standalone profit after tax to ` 3,293.13 crores for the nine months ended December 31, 2012
- 19% increase in the standalone Net Interest Income for the quarter ended December 31, 2012
- 31% growth in the individual loan book (after adding back the loans sold in the preceding 12 months)
- Gross non-performing loans stood at 0.75% of the loan portfolio as at December 31, 2012 compared to 0.82% as at December 31, 2011 – 32nd consecutive quarter end at which the percentage of non-performing loans has been lower than the corresponding quarter in the previous year.
The Board of Directors of Housing Development Finance Corporation Limited (HDFC) announced its unaudited and consolidated financial results for the third quarter of the financial year 2012-2013, following its meeting on Monday, January 21, 2013 in Mumbai. The accounts have been subject to limited review by the Corporation’s statutory auditors in line with the regulatory guidelines.
CONSOLIDATED FINANCIAL RESULTS
For the nine months ended December 31, 2012, the consolidated profit after tax stood at ` 4,556.59 crores as compared to ` 3,685.77 crores in the nine months ended December 31, 2011 – an increase of 24%.
The consolidated profit after tax for the nine months ended December 31, 2012 does not consider the charge in respect of the redemption premium on Zero Coupon Debentures amounting to ` 355.49 crores (net of tax) { ` 410 crores for the nine months ended December 31, 2011}.
Had the aforesaid adjustment been considered, the profit after tax for the nine months ended December 31, 2012 would have been ` 4,201.10 crores compared to ` 3,275.77 crores for the nine months ended December 31, 2011, representing an increase of 28%.
STANDALONE FINANCIAL RESULTS
Financials for the Nine-months ended December 31, 2012
For the nine-months ended December 31, 2012, HDFC reported a profit after tax of ` 3,293.13 crores as compared to ` 2,796.48 crores for the nine-months ended December 31, 2011 – an increase of 18%.
Financials for the quarter ended December 31, 2012
The profit after tax for the quarter ended December 31, 2012, amounted to ` 1,140.10 crores (Previous Year – ` 981.25 crores).
TOTAL ASSETS
As at December 31, 2012 the total assets of HDFC stood at ` 1,83,770 crores as against ` 1,54,036 crores as at December 31, 2011 – an increase of 19%.
LENDING OPERATIONS
As at December 31, 2012, the loan book stood at ` 1,60,941 crores as against ` 1,32,208 crores as at December 31, 2011. Individual loans sold during the preceding twelve months amounted to ` 5,264 crores. The growth in the individual loan book, after adding back loans sold is 31% (25% net of loans sold). The growth in the total loan book after adding back loans sold is 26% (22% net of loans sold).
As at December 31, 2012, the total loans outstanding in respect of loans sold stood at ` 16,049 crores. HDFC continues to service the loans sold under these transactions and is entitled to the residual interest on the loans sold. The residual interest on the individual loans sold is 1.37% p.a. and is accounted over the life of the loans.
Spreads and Net Interest Margins
The spread on loans over the cost of borrowings for the nine-months ended December 31, 2012 stood at 2.28%. Net Interest Margin for the nine-month period ended December 31, 2011 was 4.1%.
Investments
As at December 31, 2012, the unrealised gains on HDFC’s listed investments amounted to ` 34,117 crores (previous year ` 19,139 crores). This excludes the appreciation in the value of unlisted investments.
Non-Performing Loans
Gross non-performing loans as at December 31, 2012 amounted to ` 1,224 crores. This is equivalent to 0.75% of the loan portfolio (previous year – 0.82%). This is the thirty-second consecutive quarter end at which the percentage of non-performing loans has been lower than the corresponding quarter in the previous year. The non-performing loans of the individual portfolio stood at 0.62% while that of the non-individual portfolio stood at 0.91%.
The balance in the provision for contingencies account as at December 31, 2012 stood at ` 1,783 crores as against a regulatory provisioning requirement of ` 1,492 crores, hence the excess provision carried by the Corporation over the regulatory requirement was ` 291 crores. Of this ` 1,276 crores comprises general provisioning on standard loans, including provisioning on Dual Rate Home Loans.
CAPITAL ADEQUACY RATIO
HDFC’s capital adequacy ratio stood at 17.5% of the risk weighted assets, as against the minimum requirement of 12%. Tier 1 capital adequacy was 14.9% as against a minimum requirement of 6%.
DISTRIBUTION NETWORK
HDFC’s distribution network spans 326 outlets, which include 80 offices of HDFC’s distribution company, HDFC Sales Private Limited (HSPL). In addition, HDFC covers over 90 locations through its outreach programmes. Distribution channels form an integral part of the distribution network with home loans being distributed through HSPL, HDFC Bank Limited and other third party selling associates.
To cater to non-resident Indians, HDFC has offices in London, Dubai and Singapore and service associates in Kuwait, Oman, Qatar, Sharjah, Abu Dhabi and Saudi Arabia – Al Khobar, Jeddah and Riyadh.
--
CA. Rajesh Desai
Rajesh Desai
Housing Development Finance Corporation - Sharekhan
Recommendation: Hold
Price target: Rs882
Current market price: Rs815
Traction in individual loans continues
Result highlights
-
In Q3FY2013, Housing Development Finance Corporation (HDFC)'s results were largely in line with our estimates as its net profit grew by 16.2% year on year (YoY; down 1.0% sequentially) to Rs1,140.1 crore driven by a strong growth in the operating profit (up 18% YoY).
-
The net interest income (NII) growth was ahead of our estimate as it increased by 24.5% YoY (up 11.0% quarter on quarter [QoQ]) to Rs1,538.9 crore. This was led by a strong growth in the loans and a marginal increase in interest spreads (2.28% vs 2.27% in Q2FY2013).
-
During Q3FY2013, the overall loans expanded by a strong 21.7% YoY (by 26%, excluding the loans sold). The individual loans were up 25% YoY (up 31%, excluding the loans sold), thereby leading to an increase in the proportion of individual loans to 65.4%.
-
The loan approvals saw a growth of 18 % YoY whereas the disbursements grew by 19% (21% YoY in Q2FY13) during the quarter. The borrowings increased marginally (1.5% YoY) as the company redeemed part of zero coupon bonds from warrant proceeds.
-
The asset quality improved as gross non-performing asset (GNPA) was at 0.75% vs 0.82% in Q2FY2012. The outstanding provisions including the standard asset provisions on the balance sheet stood at Rs1, 783 crore as against the regulatory requirement of Rs1,492crore.
Valuation: HDFC continues to grow its advances at a healthy rate despite a rising competition (in mortgages) and weak credit demand. The proportion of retail loans continued to expand over the past three quarters. Going ahead, though the reduction in rates by the bank will ease funding costs, the rising competition could impact the spreads. We maintain our sum-of-the-parts (SOTP)-based price target of Rs882 and hold rating on the stock.
--
CA. Rajesh Desai
Rajesh Desai
Huge delivery based buying
Security-wise Delivery Position (20MAR2013)
| Quantity Traded | 40,01,852 |
| Deliverable Quantity (gross across client level) |
| 32,36,347 |
| % of Deliverable Quantity to Traded Quantity |
| 80.87 % |
--
CA. Rajesh Desai
Rajesh Desai
Our home loans go to end-users not speculators: Keki Mistry
by Sourav MajumdarIn an interview with Sourav Majumdar, HDFC’s Vice Chairman and CEO Keki Mistry discusses his strategy and why he believes the bank can grow by around 20 percent on a sustainable basis.
Q: What’s HDFC’s market share now?
A: We’ve gained market share for sure. However, I’ve said in hundreds of
interviews earlier that when you’re in the financial services business,
the last thing you should think of is market share. When you’re
lending, there’s no dearth of people who want to borrow. So, by
sacrificing your margin a bit, by sacrificing asset quality or going a
bit easy on appraisals, you can get all the market share you want. But
that’s not our objective.We have very categorically laid down certain
core objectives for ourselves at HDFC—not in recent times; it’s been
there for probably two decades.The first objective is that the return on
equity must rise by 100 basis points every year. If you see our track
record from 1994 to now, every year, other than the year when we raised
equity, the return on equity has gone up by 100 bps every year. We
raised equity only twice—in 1994 and in 2007.Our second objective is
asset quality. We’ve always said that asset quality is very critical for
us and that is reflected in the fact that historically, over a period
of 35 years, our total loan losses—money that we’ve not been able to
recover—have been only four basis points of our disbursals.
Our third objective is operational efficiency, which is reflected in probably the lowest cost to income ratios you will see in the financial sector—not in India, not in Asia, probably in the world.
Our cost to income ratio for March 2012 stood at 7.6 percent. But then, we’re not a bank and we’re selling one product.
Our fourth objective is growth. It’s not that we don’t want to grow. We do.
We set a target for ourselves that we want to grow at a certain pace and we will ensure we will grow at that pace.
Q: Which is..?
“We’ve always told investors over the years that we will never sacrifice asset quality or margins for market share. That is the basic philosophy we’ve ingrained within people here,” says Mistry
A: Typically, 18-20 percent. But it’s not as if we’re averse to further growth. So if you look at the current year, the first nine months, our actual growth in individual business after adding back the loans we sold in the last 12 months is as high as 31 percent, much higher than the target. The fifth objective is maintaining a balance sheet which is perfectly reconciled in the sense that we don’t take mismatches on interest rates or mismatches on maturity. So market share really does not figure in our objectives.’
But if you actually look at market share, there is some RBI data which comes out every month. If you see that data, housing loans in the banking system typically, in the past 12 months, have been growing at 13-15 percent and in our own case the growth we have seen in the balance sheet is 31 percent. So it’s much higher, and we’ve gained market share. But I repeat, that’s not our objective.
Q: For HDFC, asset quality has always been a very important factor. What are the key elements you consider when lending?
A: I don’t know how long this record can continue, but we’ve seen 32 consecutive quarters till December 2012, where the percentage of non-performing loans was lower than what it was in the previous year at that time. Now, 32 quarters is eight years. You can imagine how much the economy has changed in eight years. Interest rates went up, came down, went up again and are now starting to coming down.You had 2008-09, which was a terrible year in terms of global problems and India’s own issues. We’ve gone through that kind of a period. And to repeat what I told you earlier, it’s when you start going in for market share, when you start saying I need X amount of market share—someone else is growing and I need to grow faster than that—that’s the time when you start becoming a bit lax in terms of asset quality. We’ve never let ourselves become lax. Our focus has always been asset quality. We’ve always told investors over the years that we will never sacrifice asset quality or margins for market share. That is the basic philosophy we’ve ingrained within people here.When we give a loan to the customer, we never look at only the value of the property. We look at the repayment capacity of the individual, and based on that we decide how much loan we can give the customer. The property value only acts as a maximum. We will never lend beyond a certain percentage of the value of that property.The other strength is we’ve had very low staff attrition rates. People are experienced, they’ve been with HDFC for many years and have been trained in our way of doing business. Therefore, they’ve done so many appraisals in the past and know what to look for when a customer comes to them.
Q: RBI has been keeping a hawk’s eye on the real estate sector and its risks for quite some time now. How has that impacted HDFC?
A: Very little. What RBI obviously would not like to see is speculative activity in properties. Now if you look at our own business, our average loan size in the current year from April 2012 till December 2012, has been only Rs 21.5 lakh. That’s the average loan size for new loans, not the average loan size for the book. For the book it’ll be much lower—probably Rs. 8 lakh or Rs. 10 lakh because it’s historical. So on a Rs 21.5 lakh loan, if you take a 65 percent loan-to-value ratio, you’re looking at a property value of Rs 30 lakh. Now, Rs. 30 lakh is not the kind of property people speculate or make investments in.
Our loans go to middle income people who are looking to buy a house because they need a house to stay in. They are not investors, they’re not speculators, they’re end-users. Most of the loans will go to new properties, as they get constructed. Some of it will be for the secondary market, which are properties sold in the resale market, and that happens typically in big cities. So if you look at Mumbai, for example, if someone buys a property for the first time, he’ll buy a house or apartment in, say, Virar. Five years later, he builds up some savings, sells his house and buys something in, say, Mira Road or in Borivali. There’ll be someone who’ll buy his Virar apartment and we’ll be happy to finance that. So about 70 percent of our business is new properties and 30 percent is existing properties. I would say that almost everything—or a significant part of it, 95 percent plus—will be to people who are going and staying in the property. And they will typically be middle income, as reflected in the average loan size as well.
<Q Today there’s burgeoning activity in the tier II and tier III towns. Has that reflected on your loan book as well?
A: You know, 99 percent of middle class people may be aspirational and may want to buy a TV, air conditioner or a fancier car, but when they are buying a house they don’t like to leverage more than what is absolutely necessary. That is reflected in the fact that in all these years, our loan losses are only four basis points of our disbursements. Even though the loan is granted for say 12.5 to 13 years on an average, the duration of our loans is much shorter. The average duration of our loans will barely be five-and-a-half or six years. Anything between five and six years. So what happens is people keep prepaying loans all the time—about 12-14 percent of loans get prepaid every year. And every loan is an amortizing loan. It’s not as if people are buying properties they cannot afford to buy because there is an aspirational element.
Q: I was talking more about entrepreneurship growing in these towns, and whether more customers can afford to buy property now as economic activity grows in these areas…
A: Yes, that is true. If you look at our actual data, you will get the affordability ratio, which is the house price divided by the annual income. You will see that in the last 10 years, that has ranged from a low of 4.2 to a high of 5.5. This means a house costs roughly anywhere between 4.2 to 5.5 times the annual income of a customer. If you were to look at this number in the early-to-mid nineties, that ratio would have been as much as 20 times, meaning a house would cost 20 times the annual income of the borrower. Today that has come down to 4.6 times in the current year.
Q: But in general, the lower the affordability ratio, the better news it is for lenders like you.
A: Absolutely.
Q: Despite all the regulation, what are the risks you still see in the system?
A: I don’t believe there is a risk in the system unless some bank is going and lending money to property developers for buying land. There was this land buying spree in 2006 and 2007. All that has, by and large, come to an end. The 2008-09 slowdown in the economy has really had a sobering effect on most people. You know, in those days, in 2006-07, many developers wanted to tap the market and make initial public offers and investment bankers kept telling them that the more the land you buy, you will get a fancy value. The valuation of the companies was dependent on how much land they had. So many of these guys went on a land buying spree. They would go and buy a piece of land, pay 20 percent for it, buy another one, pay another 20 percent and a third. Then the time came to make the payment for the first piece of land and the crisis hit. And there was no liquidity in the system. That has not happened since then. We’ve not seen anyone being on a land buying spree.
The other thing was, till 2006-07, because there was euphoria—the economy was doing so well, the GDP was doing well and incomes were rising very rapidly—many developers went into constructing very expensive apartments. No one wanted to focus on the small apartment, one-or-two-bedroom small, affordable housing units. When the slowdown happened in 2008-09, those expensive apartments didn’t sell anymore. But the lower priced apartments continued to sell. So, post-2008-09, developers have become a lot more cautious and for every big property they construct, they also do one middle income, affordable kind of property. That’s as far as risk to the system went. But if you ask me what is the risk to growth, to my mind that would only be if people start losing jobs. Because in India we have a very conservative middle class population and if people feel they’re not confident of holding on to their jobs or not going to get their salaries, in that kind of an environment, people won’t go and buy houses.
Q: You’ve been having a 20 percent growth rate in general…
A: Yes. We had one year when growth was lower than 20 percent, which was
2008-09, at around 16 percent, but still in double digits.
Q: And you’re hoping to maintain that run rate?
A: I would hope 18-20 percent growth will continue not for one, two, three, five years but for a very, very long period of time. And I say this on the back of various reasons. One, if you look at penetration of housing loans in India, it’s very, very low. In the US, housing loans constitute 77 percent of GDP, in the UK it’s over 80 percent; Denmark is nearly 100 percent, China is 20 percent. India is at 8 percent. Even if 8 percent is to become 16 percent, we’re talking of a doubling of the existing stock of housing loans which would probably take ten years and even then we would be lower than where China is today.
The second thing which is known to all of us but maybe not so much to the outside world is, in India people don’t buy a house when they’re in their twenties. In the West, you pass out of a business school and you immediately want to stay separately from your parents and at 20, 21, 22 people go and buy houses. In India, people don’t do that. Here it’s in the mid-thirties. The average age of a customer when he takes a loan from HDFC would be anything between 35 and 38. With 60 percent of the population being below 30 years of age, all these people will, in the next five to ten years, need housing and go for housing loans. So I believe 18-20 percent growth is sustainable for a number of years. Now, it cannot be 18-20 percent every quarter. There will be quarters when it is lower and quarters when it’s higher. But on a CAGR basis, 18-20 percent over five to seven years is achievable.
Q: You don’t see this growth rate being impacted by a lack of availability? Like projects being stalled or scrapped?
A: If you look at 20 years ago, people were buying properties in six or seven cities—Mumbai, Delhi, Chennai, Kolkata, Hyderabad and such places. Today, the tier III and tier IV cities are growing so well. If you look at our January numbers, for example, Delhi NCR continues to be our largest business centre. Mumbai, which had slipped to number three for nearly two years, has started recovering from December. In December it was marginally higher than Chennai, and in January it is further higher. So Mumbai is number two. Chennai is number three. Bengaluru is four, Pune five and Hyderabad at number six. But when we talk of these cities, it’s not business generated in these cities itself. For instance, when we say Pune, it doesn’t mean loans given in Pune city itself. Pune would include places like Satara, Kolhapur, Ahmednagar. Pune is the hub. So the new places are clearly coming up.
This article first appeared in Entrepreneur India
--
CA. Rajesh Desai
Rajesh Desai
Interest exemption on housing loans will provide boost to the sector: Keki Mistry, HDFC
ET Now: The budget had some positive measures for the housing industry. What is your outlook on growth for the housing industry and then the housing sector?
Keki Mistry: The demand for housing loans has been very strong. For the first nine months of this year and in the individual housing loan category, when we add back loans sold in the last 12 months, we had a growth of as much as 31%. So it has been very strong growth in the first nine months of this year.
In the finance bill that was released a couple of weeks ago, there is a new provision which says that for a middle income customer -- who is buying a home for the first time, provided his loan amount is less than Rs 25 lakh and the property value is less than Rs 40 lakh and he takes the loan any time after 1st April 2013 and before 31st March 2014 -- there will be an added tax deduction of Rs 1 lakh towards interest. This is an addition to the existing benefit of Rs 1 lakh 50 thousand which is there.
Now this Rs 1 lakh benefit can be availed over a two-year timeframe either in 2013-2014 or 2014-2015. Something like this will act as an incentive and more and more people will want to buy a house during this period and therefore will need housing loans today.
It is early days to say what kind of growth numbers we will see, but we definitely see this providing a big fillip not just to the housing sector, not just in terms of demand for housing loans, but also more so in terms of providing support to the core economy because as we know housing supports a number of other industries as well.
There are around 276 big and small industries in India which depend on the housing sector. The big ones being cement, steel, paint, and the small ones being nuts and bolts. So effectively by encouraging the housing sector, you are providing support to all these other industries.
ET Now: Urban income has been slowing while demand remains strong in tier II and III cities. What is the growth rate that you see in the tier I and II cities as well as in III?
Keki Mistry: If you look at it in terms of locations, the largest business would be from the Delhi NCR region, from Chennai, from Mumbai and from Bangalore, followed by Pune. Business originates not just in cities, it is everywhere and includes the city outskirts also. For example, if you look at Pune, it would include places like Satara, Sangli, Kolhapur, Solapur, Aurangabad and so on. Therefore, growth is happening everywhere not just in the tier I cities, but in the tier II and tier III cities as well.
ET Now: Give us some sense on the colour of the loan growth that you are seeing in the retail wholesale book for HDFC.
Keki Mistry: We have seen the December results. The individual loan book is as much as 31%, non-individual book increased by about 16% giving an overall increase of around 25 percentage.
ET Now: Overall, what is the kind of loan book growth that you see over FY14 and FY15?
Keki Mistry: It is difficult to make a projection for what is going to happen over the next one year, but I would expect that the growth would continue to remain strong especially given the fact that now there are these initial tax benefits provided to individuals for buying houses.
ET Now: Give us some colour on how are the spreads shaping up for your retail business and for your wholesale business. Overall do you see spreads remaining stable?
Keki Mistry: Yes, spreads have been stable. As of December, they were 2.28%. If we breakout that 2.28% between individuals and non-individuals, individual spreads were at 1.95%, non-individual spreads were at 2.79%. Even incrementally if you were to look at the month of January and February, spreads have remained in the same range. So incremental loans given in Jan and Feb have been more or less the same.
--
CA. Rajesh Desai
Rajesh Desai
ET Now: The borrowing profile has been most skewed towards deposits and bonds, and the share of bank loans has relatively come down as well.
Keki Mistry: In times when interest rates are high, usually it is retail funding which is the cheapest form of funding for us. When interest rates are low, wholesale funding tends to be a lot cheaper than retail funding. So, we continue to keep a flexible approach to funding and depending on where the interest rates are in the system.
We would look at raising funds from that source at that point of time.
ET Now: Share of profits from subsidiaries and associates has been increasing. What is your outlook on subsidiaries and associates going forward?
Keki Mistry: If you look at our share of profits in the first nine months of this year, the subsidiaries put together accounted for 28% of the consolidated profits. Subsidiaries this year have accounted for 28% of consolidated profits, compared to 24% in the previous year. The share of profit from the subsidiaries as a proportion of the consolidated profits will keep increasing because some of these come from a lower base and therefore the percentage growth will be higher.
I hope that when we get into the next financial year, the share of profits from the subsidiaries as a proportion of the consolidated profits will be higher than the current level of 28%.
ET Now: So post the monetary policy, what is it that you are expecting from the RBI in terms of further repo or CRR cut over the rest of 2013?
Keki Mistry: We expect rate cuts of 75 to 100 bps during the course of this calendar year. We should be probably getting the first rate cut in January, which we did. We would get the second rate cut in March or April, which again we got -- a 25 bps rate cut.
RBI will watch for a while, see what kind of monsoon we get. They will see the range how inflation numbers, the growth numbers and all pan out. Then take a call some time in July or August. At least for the next two or three months, you may not see a rate cut coming through in the system.
The present problem of liquidity or shortage of liquidity in the system is very typical at this time of the year. If you look back at the last 15 or 20 years, every year you will find that in February and March, liquidity tends to become very tight and there are a number of reasons for that. One of the fundamental reasons is that there is a large amount of tax payment which has to be made on the 15th of March. So suddenly a huge amount of liquidity gets sucked out of the banking system and goes to the government. Then the government start spending that money only post April.
The liquidity will re-enter the system as we get into April and May and will ease interest rates. February and March is always the period of tight liquidity.
ET Now: The Indian economy has slowed down considerably post the recent political developments. What are the steps that the government can still take to revive the economy?
Keki Mistry: Growth has been slow for the last couple of years. What we have seen in the last seven or eight months in terms of action from the government has been very-very positive -- increase in diesel prices, increase in petrol prices, increase in rail prices -- all of that have been far from populist measures. The finance ministerhas delivered as promised 4.8% fiscal deficit for next year and 5.2% fiscal deficit for the current year.
A lot of effort was made by the government in the last seven-eight months to try and bring economy back in order. I am reasonably confident that kind of trend will continue going forward and hopefully over the next three-six months we will see the investment cycle actually re-starting in terms of large investments being made.
But at least sentiment at the ground level has been a lot better in recent times compared to what it was a year ago. People are looking at investing, valuating options and at some point of time over the next quarter or two the investment will flow throughout the system.
CA. Rajesh Desai
Rajesh Desai
Management Meet Update
HDFC Limited - Strong core business performance; Upside capped by expensive valuation
We met with the management of HDFC Limited and below are the key highlights:
Mortgage buoyancy continues; HDFC gaining market share
Despite adverse macro environment and modest mortgage growth for the system (13% YoY), business growth for HDFC Limited continues to remain robust with strong disbursements across NCR region, Tamil Nadu, Gujarat and other regions like Chennai, Bangalore and Delhi. While corporate loan book is likely to grow at 14-15%, Retail loan growth is likely to accelerate at 30% YoY levels (excluding sell down) during 4Q.HDFC Management also highlighted, that despite the heightened competition from PSU banks, HDFC Limited increase its market share in mortgage business during the current quarter. However going forward for FY14e, management expects loan book to clock a growth of 18-20%.
Spreads to remain stable at 2.15-2.35%
With
CP & CD rates having declined by about 175-225bps over the past one year due
to improved liquidity, we believe that HDFC limited is likely to be key
beneficiaries of an easing wholesale rate in the system. Re-pricing of high-cost
term deposits coupled with benign wholesale deposit rates will lead to lower
cost of funds and expanding margins. Incremental funding for HDFC limited is
coming from money market issuances i.e. Bonds, debentures, FRN and CPs which are
100-125bps cheaper. Recently HDFC has raised 2-3 year money at 9.20%. However,
going forward, with liquidity situation improving and banks reducing their base
rate, HDFC may look at increasing its dependence on terms loans from banks.
Going forward, management expects spreads to remain flat within its historical
band of 2.15-2.35%.
Asset quality continues to remain stable
Management highlighted that despite a lot of investor pessimism, current health of real estate companies is far better than during the credit crisis given that these companies have relatively lower leverage. Further, they are not facing any asset quality issues related to their retail loan portfolio. Hence asset quality is likely to remain stable during 4QFY13.
Valuation and outlook
At the CMP of INR 753, HDFC is trading at 4.0 FY14E P/BV and 20.9 FY14E P/E which continues to remain a tad expensive given the near term challenges. Hence, we maintain a HOLD recommendation on the stock with a TP of INR840/share.
--
CA. Rajesh Desai
Rajesh Desai
Housing Development Finance Corporation - Sharekhan
Recommendation: Hold
Price target: Rs910
Current market price: Rs886
Price target revised to Rs910
Result highlights
Housing Development Finance Corporation (HDFC)’s Q4FY2013 results were in line with our estimate as its net profit grew by 17.3% year on year (YoY; up 36.4% sequentially) to Rs1,555 crore driven by a healthy growth in the operating profit (up 14.6% YoY).
The net interest income (NII) growth was largely in line with our estimate as it increased by 11.9% YoY (up 26.8% quarter on quarter [QoQ]) to Rs1,950.8 crore. A strong growth in the advances and stable spreads contributed to the NII growth.
Overall, the loan book expanded strongly by 20.7% YoY (up 24% YoY, including the loans sold). The individual loans were up 25.4% YoY (up 31% YoY, including the loans sold), thereby leading to an increase in the proportion of individual loans to ~66.0%.
The loan approvals saw a growth of 14.5% YoY whereas the disbursements grew by 15.9% during the quarter. The borrowings increased by 32.1% YoY.
The asset quality improved as the gross non-performing asset (GNPA) was at 0.7% vs 0.75% in Q3FY2012. The outstanding provisions including the standard asset provisions on the balance sheet were higher by Rs286 crore as against the regulatory requirement of Rs1,506 crore.
Valuations: HDFC’s strategy of reaching out to newer geographies is bearing fruits as the loan book continues to expand at a healthy rate despite competition. The company’s strong distribution network (both metro and non-metro regions) and competitive pricing of products are likely to contribute to a strong growth. We have marginally tweaked the estimates for FY2014 and FY2015, and revised the sum-of-the-parts (SOTP) based price target to Rs910. However, we maintain Hold rating on the stock due to premium valuation.
--
CA. Rajesh Desai
Rajesh Desai
--
CA. Rajesh Desai
Rajesh Desai
HDFC gains after twin bulk deals
Housing Development Finance Corporation rose after 0.14% equity changed hands in two bulk deals on BSE today, 14 June 2013.
A bulk deal of 20 lakh shares was struck on the Housing Development Finance Corporation (HDFC) scrip at Rs 820 per share at 09:16 IST on BSE today, 14 June 2013. Another bulk deal of 1 lakh share was executed at same price and time. The two bulk deals saw 0.14% equity of HDFC changing hands.
--
CA. Rajesh Desai
Rajesh Desai
Jun 21, 2013, 02.05 PM IST
Be alert about teaser rate products: HDFC's Deepak Parekh
Taking a dig at teaser rate products HDFC chairman Deepak Parekh cautioned borrowers of its risk factors. Customers need to be cautious of "too-good-to-be-true" type of products, he said in the company's annual report addressed to shareholders.
Taking a dig at teaser rate products HDFC chairman Deepak Parekh cautioned borrowers of its risk factors. Customers need to be cautious of "too-good-to-be-true" type of products, he said in the company's annual report addressed to shareholders.
"To my mind, teaser products, of any nature entail risks. Borrowers must not be blinkered into believing that there are no risks when developers offer to pay interest on a borrower's loan for a specified period. Borrowers have to be cautious because in the event of a developer delaying payment, the credit bureau reports will reflect this in the borrower's records, thereby impacting his or her creditworthiness," he explained.
There are two kind of teaser rate home loan products: one offered by lenders including banks and housing finance companies while builders too woo home buyers through teaser schemes. Parekh talked about the latter.
When lenders offer it, it is also called as dual rate home loan schemes wherein borrowers repay at a concessional fixed rate for initial few years.
According to the chairman of India's largest housing finance company, alert should be raised if schemes or products are detrimental to the system as a whole. Unhealthy business practices can infiltrate into the system due to the herd mentality instinct and business compulsions. However such breeding grounds must be nipped in the bud.
"Ultimately, developers need to recognise that in the long-run, it is to their advantage to allow a correction in prices which will help their cash flows," Parekh said.
This is how it works:
In the wake of rising pile of inventory and drying up sales, many builders are luring customers by committing to repay interest on home loans for 3-4 years till the project is commissioned. They will repay to lenders on behalf of customers who are required to make to only around 20 percent payment at the time of booking properties.
Problem arises when projects get delayed from the scheduled time while the lender starts disbursing further. Therefore, the entire onus of repayment be it interest or principal amount comes on customers.
For those who buy home for investment purpose, this is particularly worrisome situation. Many of them wish to exit their investment well before possesion.
Irrespective of anything if builders defaults in the committed interest payment, borrowers will end up spoiling their credit record.
Parekh for prudent growth in housing
"It is important to safeguard the housing finance market and ensure that it continues to grow in a prudent manner. Regulators need to be vigilant and have their ear to the ground. Customers must understand the risks entailed in the products they opt for and lenders should fulfil their obligations of responsible lending," he said.
In FY 2013 - a year that witnessed India's lowest GDP growth in a decade, the growth in individual home loans remained strong. The demand for home loans is immense given the acute shortage of housing.
"Being increasingly convinced that the worst is probably behind us, the future outlook for the housing finance sector is extremely promising," he said with a note of optimism.
--
CA. Rajesh Desai
Rajesh Desai
ECB norms eased for low-cost housing
The Reserve Bank of India has relaxed the external commercial borrowing (ECB) guidelines for developers/builders executing low-cost affordable housing projects. As per the central bank’s revised eligibility criteria, developers/builders with a minimum of three year’s experience (five-years prescribed earlier) in undertaking residential projects and having good track record in terms of quality and delivery can tap the ECB route. The aggregate limit for ECB under the low-cost affordable housing scheme has been extended for the financial years 2013-14 and 2014-15 with a ceiling of $ 1 billion in each of the two years. The condition of minimum paid-up capital of not less than Rs 50 crore, as per the latest audited balance-sheet, for Housing Finance Companies (HFCs) has been withdrawn. HFCs utilising ECBs have to ensure that the cost of individual units does not exceed Rs 30 lakh and the loan amount does not exceed Rs 25 lakh.--
CA. Rajesh Desai
Rajesh Desai
Credit ratings agency, CARE has reaffirmed ‘AAA’ rating to Housing Development Finance Corporation’s (HDFC) long term bank facilities worth Rs 6,450 crore. The rating agency has also reaffirmed ‘A1+’ rating to the company’s short term bank facilities worth Rs 9,366 crore which enhanced from Rs 3237 crore.
The company has received the said rating on the back of its market leadership in the housing finance industry, long-standing track record of operations, adequate capitalization levels, low operating costs, technology efficiency and good asset quality.
--
CA. Rajesh Desai
Rajesh Desai
July rate cut unlikely; see no margin impact in 2013: HDFC
HDFC's Keki Mistry believes RBI is unlikely to reduce policy rates in its July policy. But higher current account deficit and free fall in the rupee's rate against the US dollar would weigh on the RBI's policy decisions, he says.
The Reserve Bank of India (RBI) is unlikely to reduce the policy rate in its July policy. However, the higher current account deficit coupled with the free fall in the rupee's rate against the US dollar would weigh on the RBI's policy decisions, said Keki Mistry, vice-chairman and CEO, HDFC- India's largest housing finance company.
"The benefits of rate cuts can be passed on if sufficient liquidity is available. Rate cut is not expected in RBI's policy," he told CNBC TV18 in an interview.
Since the beginning of 2013, RBI has so far slashed the policy rate by 50 basis points. However, lenders have not passed on the benefits of rate cuts on the ground of liquidity.
HDFC has already put in application to raise funds through external commercial borrowing (ECB) route. Last week, RBI had eased fund raising norms through ECB route for the low cost affordable housing projects. Both housing finance companies (HFCs) and developers are the direct beneficiaries.
Below is the verbatim transcript of Keki Mistry's interview on CNBC-TV18
Q: RBI has lowered the risk weights on certain categories of housing loans as well as commercial real estate which is into housing and is also already attracting lower risk weights. What is the net benefit to you? Your non-individual, non-retail loans are all to people with exposures in housing.
A: Looking at the retail segment, the bulk of our loans is to people who are in the middle income segment. If you look at average loan size, for the year ended March 2013 it was about Rs 21.60 lakh. A reduction in the risk weight for loans above Rs 75 lakh does not give us direct benefit on all these loans. A small segment of our portfolio will get a lower risk weight, but a significant portion of our portfolio would be at a level which is lower than Rs 75 lakh.
Q: We got some research reports saying that 15 percent of your exposure is to categories in commercial real estate that are into housing. Is there any monetary amount that you can tell us in terms of relief?
A: It is not a question of freeing up any monetary amount. It frees up capital. If you look at our capital adequacy, our capital adequacy is frankly quite high. Our tier-1 capital on March 31 stood at 13.8 percent against the regulatory requirement of 6 percent. So the tier-1 capital will now move up because of this change from 13.8 percent by about 2.5-3 percent odd. So there is an increase in tier-1 capital because of the reduction in risk weight, but it does not result in a direct reduction in cost of funds for us.
Q: Isn't there some relief on some standard asset provisioning as well?
A: Yes, there is a reduction in the level of provisioning for non-individual loans, but again there you need to keep in mind that we have always carried excess provisioning. If you look at year ended March 2013, we were carrying an excess provisioning of nearly Rs 300 crore and that Rs 300 crore will increase by another Rs 350 crore in this quarter. This is because the provisioning on our dual rate loans is now capable of being reversed if we wish.
We may just hold the excess provisioning in the books and thereafter make lesser provisioning in the monthly P&L account and that is the call we have to take. We already carry a huge amount of excess provisioning, nearly Rs 650 crore as of June.
Q: We have also seen some increase in the yields. The 10-year yield has shot up above 7.4 percent. HDFC Ltd. is a market borrower. Have we seen an increase in the cost of funds and the borrowing for HDFC Ltd. and if yes, by how much?
A: It is not that we go everyday to the bond market or to the outside market to raise money. It is an ongoing process. We have seen yields tightening in last three-four days. Today again yields have come off a little bit. If you look at five year paper for example, yields are down by about 15-20 bps compared to what they were on Friday. So this is a dynamic thing and we would raise money or would go to the market to get money only at a time when we believe that the pricing is just right. Today probably is not a time when we are looking at going to the bond market to raise money.
Q: What was your outlook in March and April? One was looking for at least some rate cuts and the yields reflected that. Now the sentiment itself has changed because of the rupee depreciation and hardening of yields all over the world. So, in this quarter or in the July-September quarter, do you think yields will be under pressure? Would you do 10-20 bps less than what you did in the fourth quarter of last year?
A: I do not believe so. There will not be any change in the level of yield simply because when you are comparing India with the western world and saying in all over the west yields have increased, you need to keep in mind that in India interest rates were always very high, whereas in the western world interest rates were brought down a lot. Therefore, from those extremely low levels you might see yields going up a bit, but in India we kept interest rates very high. So, I do not see significant increase in the level of yields.
AAA bond paper for five years is down by nearly 15-20 bps and so, I do not see there will be any significant change in cost of funding. If you were to look at the bond market there has been a significant reduction in cost of funding in first couple of months, right from the middle of April till middle of June.
Q: When we had no rate cut in the June policy, everyone hoped that it would come in July policy, but now with the rupee falling all the way down to 59-60 level, do you expect a rate cut in July policy?
A: No, I do not think we will see a rate cut in the July policy. If you look at the macro and the fact that inflation is down to a significant low, inflation is down to a three year low in terms of wholesale inflation and that warrants a rate cut. At the same time, the volatility that we have seen in currency markets, the pressure that we are seeing on the current account deficit (CAD), the fact that oil prices still hover between those levels of USD 102-103-104/barrel, all of that will result in RBI holding on, not doing a rate cut now.
We have seen a couple of rate cuts by the RBI and have not seen them getting passed on in the system. We have seen lower lending rates by banks and for that you need to understand that if you look at the balance sheet of a bank a significant portion of the funding of a bank comes from deposits, the total funds in the banking system is nearly Rs 75 lakh crore and out of that the amount of money that banks borrow from RBI on a given day is roughly about Rs 50,000 crore to Rs 1 lakh crore.
When RBI cuts rates, it is a small portion of the funding of a bank where the interest rates comes down. Therefore, their ability to pass on the rate cut, or the ability to reduce interest rates stems in only when there is sufficient liquidity in the system which enables them to cut deposit rates.
The growth of deposits in the banking system so far has been fairly muted. Last time the number was about 13.3-13.4 percent. We need that number to go higher, for which we need more liquidity in the system.
Q: The RBI has opened a crack in the door for you to get external commercial borrowings (ECB) in. When we last spoke you had put in an application, have you got any money?
A: No, we have not. We have put in an application. This door was opened just in the middle of last week. It has to get approved by the National Housing Bank (NHB), then we have to go to RBI and then we have to watch the market. It is not that we would go to the market on any given day and raise money.
When we are looking at the possibility of raising, let us assume we do a three year borrowing. If we were to do a three year borrowing a week earlier, forget the volatility we have seen in markets in the last one week then the fully hedged all-in funded cost to us would have been somewhere in the vicinity of about 8.5 percent or so. This is pretty much in line with what are marginally lower then domestic rupee funding cost today would be. Therefore, there is an advantage at that time in raising foreign money.
With the depreciation in the rupee forward, yield curves would have come down a bit, which means hedging costs should have come off a bit, because when the spot rate go higher the forward rate generally does not move at the same pace. So we had to review these costs once we get the RBI approval and that is the time when we will go to the market to raise money.
Q: Deadline for new bank licenses falls today. It is all going to be future competition for you. What is your own estimate in terms of how many new banks you may have six or nine months down the line?
A: This is a bit of a guess work. We do not know how many licenses RBI is going to put out, or how many people are going to go and put their application in. RBI would look to give about 5-6 banking licenses. In the long-term, there is little bit of competition, but we have always been mindful of competition. We see what competition is doing, but we are not unduly worried about competition.
Q: With regards to non-banking financial companies (NBFCs) and the banking sector person who knows both these sides very well given the exposures of your group, when does competition really kick in? All these guys start with a huge disadvantage in terms of having to adhere to cash reserve ratio (CRR), statutory liquidity ratio (SLR) and priority sector lending ( PSL ) norms from the day they get the license. To that extent, do you think competition for you is postponed by three-four years?
A: I would think so. Today, every bank can give housing loans, but if you look at the overall growth of housing loans in the banking system till March, it was only some 16.4 percent. It is not that banks are being stopped from giving housing loans, but they find that there are other products which they can lend, where they can get a much higher margin. So just because we have new banks, does not mean that every bank is going to start rushing into do housing loans.
--
CA. Rajesh Desai
Rajesh Desai
Housing finance regulator to back HDFC application for $500-m ECB
National Housing Bank (NHB), the housing finance regulator, is favorably disposed to HDFC's application for a $500-million external commercial borrowing (ECB) for affordable housing projects in India. NHB will soon recommend HDFC's application to the Reserve Bank of India for the latter's approval. Housing finance companies have been asked to route their ECB applications through NHB, which looks into various regulatory aspects before forwarding them to RBI for approval. NHB too, on its own account, proposes to approach RBI for a $200-million ECB proposal.
Impact
Positive for HDFC Ltd--
CA. Rajesh Desai
Rajesh Desai
|
Date |
Spot |
Traded Vol (mn shrs) |
Delivery Vol (mn shrs) |
% Delivery Vol |
OI July (mn shrs) |
CoC July |
|
15-Jul-13 |
848.50 |
1.69 |
1.19 |
70.61 |
6.17 |
5.16 |
|
12-Jul-13 |
851.30 |
3.41 |
2.67 |
78.25 |
6.07 |
9.56 |
|
11-Jul-13 |
854.80 |
3.52 |
2.86 |
81.48 |
6.05 |
6.71 |
|
10-Jul-13 |
827.50 |
3.55 |
3.00 |
84.44 |
6.23 |
5.29 |
|
9-Jul-13 |
830.05 |
3.48 |
2.95 |
84.90 |
6.24 |
10.03 |
|
8-Jul-13 |
824.05 |
3.89 |
2.89 |
74.34 |
6.15 |
12.51 |
|
5-Jul-13 |
850.10 |
2.07 |
1.46 |
70.76 |
5.78 |
10.63 |
|
4-Jul-13 |
852.10 |
1.34 |
0.84 |
62.68 |
5.65 |
9.18 |
|
3-Jul-13 |
853.60 |
1.84 |
1.35 |
73.42 |
5.62 |
5.64 |
|
2-Jul-13 |
875.15 |
2.25 |
1.47 |
65.30 |
5.66 |
8.16 |
|
1-Jul-13 |
889.65 |
2.70 |
1.95 |
72.38 |
5.30 |
4.27 |
· HDFC, in the recent past, has bounced back to higher levels of 860 from a low of 820 levels (as marked in green above). The bounce back has been on back of higher traded volumes and higher delivery volumes. Average trading volumes during these sessions stood at 3.57 million shares while average delivery volumes stood at 2.88 million shares. % delivery volumes too remained on the higher side at an average of 81%.
· During the start of the series, the stock declined from a high of 890 levels to a low of 820 levels (as marked in red above). The decline was on back of lower traded volumes and lower delivery volumes. Average traded volumes during these sessions stood at 2.04 million shares while average delivery volumes stood at 1.42 million shares. % delivery volumes too remained on the lower side at an average of 69%.
· July futures have registered an highest open interest of 6.24 million shares as against 3-month average highest open interest of 7.74 million shares. Moreover, the current open interest stands lowest in last 3 series indicating no major accumulation of positions. With open interest significantly below the past averages, the risk of any major selling on account of profit booking is lower.
· The stock is currently trading close to its strong support level of 800. We suggest to accumulate long positions in the range of 808-810 levels for an immediate target of 920 levels. We recommend holding positions with a stop loss placed at 755 levels on a closing basis.
Thanks & Regards, |
Emkay Equity Advisory | Emkay Global Financial Services Ltd. | www.emkayglobal.com |
7th Floor, The Ruby, Senapati Bapat Marg, Dadar (W), Mumbai– 400 028| Board No.: +91-22-66121212 | Fax : +91 22-6612 1299 |
CA. Rajesh Desai
Rajesh Desai
11.9b rupees, median of 32 analysts est. shows.
--
CA. Rajesh Desai
Rajesh Desai
Matushri Sabhagar, New Marine Lines.
--
CA. Rajesh Desai
Rajesh Desai
Housing Development Finance Corporation - SHAREKHAN
Recommendation: Hold
Price target: Rs865
Current market price: Rs804
Price target revised to Rs865
Result highlights
-
For Q1FY2014, Housing Development Finance Corporation (HDFC) reported a profit of Rs1,173 crore (up 17.1% year on year [YoY]), which is below our estimate. The lower than expected growth in the net interest income (NII; up 16.7% YoY) and absence of capital gain income contributed to the variance. The operating profit increased by 15.3% YoY.
-
The interest spread was stable at 2.29% (vs 2.30% in Q4FY2013 and 2.27% in Q1FY2013) while the net interest margin increased to 3.9% from 3.45% in Q1FY2014. During the quarter, the spread on non-individual loans declined by 12 basis points quarter on quarter (QoQ) to 2.82%.
-
Overall loan book expanded by 19.4% YoY (up 24% YoY, including the loans sold). However, the non-individual book expanded by 11% YoY. Consequently, the proportion of individual loans expanded to 67% of the book.
-
The asset quality was largely stable as the gross non-performing asset (NPA) was at 0.7% vs 0.77% in Q4FY2012. The outstanding provisions including the standard asset provisions on the balance sheet were significantly higher than the regulatory requirement.
-
The non-interest income increased by 12% YoY though there was no income from capital gains. The fee income declined by 12% YoY but dividend income increased by 36% YoY.
Valuation: HDFC's Q1FY2014 results were slightly lower than our estimate. Therefore, we have revised our estimate to factor rising competition and pressure on spreads. We expect earnings to grow at a compounded annual growth rate (CAGR) of 18.2% leading to a return on equity (RoE) of ~18 % and return on asset (RoA) of 2.7%. We maintain Hold rating on the stock with a revised sum-of-the-parts (SOTP) based price target of Rs865.
--
CA. Rajesh Desai
Rajesh Desai
Up-to-date with fund needs; won't hike rates: HDFC's Mistry
HDFC's Keki Mistry believes that RBI measures are temporary in nature and will not warrant a rate hike. As far as its fund requirements are concerned, the housing major maintains a flexible approach and has shored up it requirements up to the month of July.
Reserve Bank of India's relentless efforts to tame rupee has resulted in it imposing a string measures which are keeping banks on a tight leash. On Tuesday, the central bank announced fresh measures to drain cash, making access to short-term funds harder for lenders as it lowered the overall limit for borrowing under the daily liquidity adjustment facility (LAF) - which offers funds in exchange for collateral - for each bank to 0.5 percent of deposits from 1 percent. This move gave fresh thrust to the existing talks that banks will eventually raise lending rates.
But HDFC 's Keki Mistry believes that RBI measures are temporary in nature and will not warrant a rate hike. As far as its fund requirements are concerned, the housing major maintains a flexible approach and has shored up it requirements up to the month of July. However, if the tightening measure continues for unforeseen period, lending rates will have to be raised.
Tuesday's moves come a week after the apex bank's initial steps which did not steady the rupee to the desired extent. The home currency remained volatile and within the sight of a record low of 61.21 hit on July 8.
Below is the edited transcript of his interview with CNBC-TV18:
Q: You are more dependent on borrowing from the market and market rates have clearly gone up 200 bps in the last two weeks, what is your sense, is it only a matter of time before you push up lending rates?
A: When you talk about our borrowing, if you look at our balance sheet over the years, we have a very flexible approach to funding. At times when interest rates are low, yes, we raised a lot of money through bonds. At times when interest rates are high, we raised a lot of money through deposits. So we keep an extremely flexible approach to funding. For example, you would have seen that last year, you would have seen that the year before the last and so on and so forth.
We have to plan our funding a little more carefully. If we have to first evaluate whether this is a long-term measure or a short-term measure, my personal view I reiterate what I have said earlier is that it is a little unlikely that this measure will continue for too long a time because if this continues beyond a month, it will start choking growth in the system. That to my mind is not what the RBI would be looking at.
Q: It is already two weeks, are you saying that your waiting period is August 15, when will your patience run out or when will your feeling turn around to this being slightly longish?
A: First we will have to see what happens in the credit policy next week. Let us see if RBI looks at interest rates whether they change anything on rates, they change anything on CRR. I personally don’t think they will but let us wait and see.
As far as the policy measure is concerned in the recent past, I suspect they’ve done it is because they must be having data which would suggest to them -- and that is data which is not in our hand -- that there is a lot of speculative activity in the rupee, which is being created by people taking money, hedge funds or whoever, in the short-term market here and then shorting the rupee. Now, if in the long-term you want interest rates to come down in India then you need stability in the rupee.
One cannot drop interest rates if you are seeing this kind of volatility in rupee. We have seen that over the last month to a month and a half the rupee has been very volatile. So if it is the measure just to get some stability on the currency based on the data that RBI has had then I don’t think this measure will last for very long. A month, five weeks, six weeks you cannot measure it in terms of days.
--
CA. Rajesh Desai
Rajesh Desai
1QFY14 Results
Review - Antique
HDFC Limited - Steady performance continues
Key Highlights
HDFC Limited demonstrated one more quarter of steady performance with reported earnings at INR 11.7bn below our estimates of INR 12.05bn due slightly higher operating expenses. While 1Q tends to be a seasonally weak quarter in terms of excessive liquidity, however, overall core trends continued to be in line with expectations with buoyancy in retail loan growth, strong operating efficiency and excellent asset quality.
Buoyancy in retail disbursement continues
Despite adverse macro environment and reasonable mortgage growth for the system (17% YoY), business growth for HDFC Limited continued to remain robust. Growth in individual loan book continued to remain strong at 24% YoY (including sell down at 31%YoY), while corporate loan book grew at 11% YoY. Loan mix has remained stable in favor of retail mortgages. Despite sell down of loans to HDFC Bank, overall loan growth posted was healthy at 19% YoY which is commendable in our view. Adjusting for that, loan growth would be higher at 24%.As of now, management has reinforced its view of targeting loan growth at 18-20% for FY14e.
Strong uptick in margins and spreads
NII for HDFC came in at 16% YoY given that the company builds up excess liquidity during 1Q and runs it down during the rest of the year. HDFC has invested INR400 bn in mutual funds during the quarter thereby negatively impacting margins. Reported margins were down 30bps QoQ to 3.9% while reported spreads declined 1bps QoQ to 2.29%. The company has once again increases its reli-ance on borrowings from money markets which now form 59% overall funding mix. Short term CPs (duration of 6 months) form 7% of overall funding and the company tends to borrow more at the long end of the yield curve (3-5 years) and hence is much better placed to manage tough liquidity environment. Management expects spreads to remain flat within its historical band of 2.15-2.35%.
Stable asset quality both on individual and non-individual loan portfolio
Asset quality continued to remain remarkable as always with GNPA ratios continued to improve YoY for 34th consecutive quarter in a row basis. The non-performing loans of the individual portfolio stood at 0.61% while that of the non-individual portfolio stood at 1.08%. Further, HDFC Limited continues to carry surplus provisions amounting to INR 4.75bn over the regulatory requirements.
Valuation
&
Outlook - RDD
We increasing our TP marginally from INR840/share to 873/share due to higher price attributed to HDFC Bank and maintain our Hold rating on the stock due to rich valuations. (4x FY15E P/BV and 20.5x FY15E P/E).
--
CA. Rajesh Desai
Rajesh Desai
Respected Raju Desai Sir,
Please share result updates of HDFC.
With best regards,
--
Raziabegum Arif --
You received this message because you are subscribed to the Google Groups "LONGTERMINVESTORSRESEARCH" group.
To unsubscribe from this group and stop receiving emails from it, send an email to longterminvestorsr...@googlegroups.com.
For more options, visit https://groups.google.com/groups/opt_out.
CA. Rajesh Desai
Rajesh Desai
Daily Alerts - Kotak | |||||||||
Change in Reco | |||||||||
HDFC: Stock correction provides an opportunity, upgrade to ADD | |||||||||
|
CA. Rajesh Desai
Rajesh Desai
CA. Rajesh Desai
Rajesh Desai
Tightening home loan disbursals to lower risks: Keki Mistry
Any plan where the bank disburses money upfront and leaves it to the builder to complete the project is fraught with risk, explains HDFC's Keki Mistry.
Keki Mistry
Vice-chairman & CEO
HDFC
Also Read: Housing loans should be linked to construction stage: RBI
Earlier today, the RBI told banks not to dispense upfront the entire loan amount for a house that's still under construction. Objecting strongly to builders schemes like 80:20, the RBI today said disbursement of home loans should be closely linked to construction, and not be paid upfront to developers.
Though builders across the country have been relying on schemes like 80:20 and 75:25 to attract buyers, Mistry does not see an impact on the home loan business due to the RBI circular.
Below is the verbatim transcript of Keki Mistry's interview on CNBC-TV18
Q: The Reserve Bank of India (RBI) has tightened home loan norms. What is your first reaction?
A: My first reaction is that it is very good for the system. We have always been very cautious with our disbursements. We would disburse money on a loan only after the property had been completed up to a certain stage. So the disbursement is made according to the stage of construction. Any plan in our view where you disburse money upfront and then leave it to the builder to complete the project is fraught with risk. The risk is both to the system and in my view even to the individual who is buying house.
So I would say it is a good measure from RBI. I do not think it would create any problem for anyone. The fraught which is there in the system where people are misusing the system and taking money upfront and maybe someone maybe diverting money, that kind of stuff will get stopped with what RBI has done. So we encourage it. We think it is very good.
Q: What is this actually going to do to home loan off take? Just yesterday we had Mr. Parekh talk to us about how he anticipates home loan growth to continue to be robust in excess of 20 percent. Do you believe that with this notification perhaps we are going to see a decline?
A: Absolutely not. We do not have any project where we disburse money upfront based on the projected cash flow.
Q: Not for you particularly, but for the sector at large.
A: These 80:20 schemes or 75:25 schemes, most of these schemes are actually schemes where the money is disbursed only based on construction. There maybe a stray case here and there or a free project here and there where a bank or a non-banking financial company (NBFC) or whoever maybe disbursing money in advance. To my knowledge there are not that many projects. So I do not see it having any material impact on growth for the system. Even these projects where money is being made upfront is largely in the big cities.
Q: Confederation of Real Estate Developers' Associations of India (CREDAI) has just said in its statement, abruptly issuing such circulars, advising banks against established practices only harm the sentiments and disrupt business plans. This at the end creates a setback for projects affecting end consumers. That seems to be the voice coming in from the developers' lobby?
A: We have grown at 31 percent in the first quarter and we have always guided towards 18-20 percent growth and we believe that growth is not in anyway going to get impacted because of this change, because we have never disbursed money in advance. The risk is when you disburse money in advance, the money need not necessarily go for the construction of the project and that puts both the lender as well as individual customers who are buying the house at risk.
Q: Isn't there a valid point in the argument that CREDAI is making that there should have been some sort of consultation before this notification was issued, because these schemes have now been in existence for over a year now and just about every developer, all the big names in the industry have been going down this road?
A: Just because you have a 80:20 scheme does not necessarily mean that the money is disbursed upfront to the developer. Even in a 80:20 scheme, the bank agrees to disburse 80 percent of the loan amount to the customer based on its repayment capacity, but those disbursements are made over a period of time as the property gets constructed. So it does not mean just because there is 80:20 scheme the money gets disbursed upfront. That is not the case. That is only 3-4 projects, but not with a majority of them.
Q: So you believe that this will have limited impact as far as the real estate sector is concerned?
A: I think it will be a very limited impact.
--
CA. Rajesh Desai
Rajesh Desai
Reuters Market Eye - Shares in Housing Development Finance Corporation (HDFC.NS) are off lows after falling as much as 2.3 percent as FTSE increased its "investability weight" to 100 percent from 74 percent in its global equity index series, as per its website.
Analysts expect nearly $200 million, or around 16 million shares, of foreign institutional buying flows in HDFC on increased weight in the FTSE index series.
--
CA. Rajesh Desai
Rajesh Desai
CA. Rajesh Desai
Rajesh Desai
Housing finance companies curb lending to under-construction properties
Home loan growth is slowing in urban areas; but has been going strong
in mid-tier towns
CA. Rajesh Desai
Rajesh Desai
RBI approves HDFC’s $300m borrowing to fund affordable housing, Executive director V. Srinivasa Rangan says. Co.
may borrow this qtr looking at market conditions, he says
CA. Rajesh Desai
Rajesh Desai
Read more at: http://www.moneycontrol.com/news/business/confident18-20-loan-growthh2fy14-keki-mistry_969200.html?utm_source=ref_article
CA. Rajesh Desai
Rajesh Desai
CA. Rajesh Desai
Rajesh Desai
Profit rose on the back of growth in loans to individuals, in line with market forecasts, to Rs 1,266 crore from Rs 1,151 crore a year ago.
Going ahead, a sharp drop in property prices is unlikely, said Keki Mistry, vice-chairman and CEO.
"Prices can come down here and there but there is not going to be a dramatic reduction," said Mistry. "We expect the loan book to grow 18-20% over the next three years, where some quarters may see higher growth and some lower."
Demand has come mainly from the outskirts of major cities and tier II & III areas.
The loan book grew 22%, boosted by an increase in demand from individuals, to Rs 1,84,886 crore from Rs 1,55,128 crore.
 |
"HDFC paid dividend in the first quarter of the financial year, which they had paid in the second quarter last year," said Mistry. "We were able to maintain stable spread as a result of volume growth."
Gross non-performing assets (NPAs) rose to 0.79% from 0.77% in the previous quarter. This was the first increase in bad loans in 35 quarters. Bad loans in the non-individual segment rose to 1.19% from 1.08% due to a large account turning bad during the quarter.
HDFCBSE 0.23 % classified Rs 460 crore of loans to Hirco in Chennai as NPAs in the quarter. Mistry said the company has started recovery proceedings against the builder and hopes to recover the loan over the next two-three quarters.
Analysts said future growth is not a concern as HDFC can exercise discretion over who it gives money to.
"HDFC is seeing demand from salaried customers and the segment is growing," said Vaibhav Agarwal, an analyst at Angel Broking. "They should be better positioned than competitors as they are able to choose their customer and offer loans at competitive rates. We are not concerned about growth as of now."
Net interest margin narrowed to 4.1% from 4.2%, while the spread on loans was 2.24% compared with 2.27% in the year earlier.
CA. Rajesh Desai
Rajesh Desai
HDFC's 29% growth in retail loan book defies slowdown
Higher reliance on bank borrowing in Q2 impacts net interest income but trend likely to reverse
Adjusting for loans sold, HDFC's loan book has grown by 19% year-on-year. Asset quality too has remained stable and is not showing any sign of stress, at least in the individual segment.
--
CA. Rajesh Desai
Rajesh Desai
HDFC raises home loan rate by 10 bps
Interest rate on loans of up to Rs 30 lakh will be 10.5%, while for Rs 30-75 lakh it will be 10.75
CA. Rajesh
The interest rate on home loans of up to Rs 30 lakh will now be 10.5 per cent, while from Rs 30 lakh to less than Rs 75 lakh, the rate will be 10.75 per cent.
Following the hike, the lender’s retail prime lending rate now stands at 16.75 per cent.
This is the first rate increase by the home loan firm since it had hiked it by a similar amount on August 24.
Rajesh Desai
HDFC plans to raise $300 mn
It is raising the money under the $1 billion ECB window for housing finance companies that the RBI allowed for funding affordable housing projects
"About $300 million, we are going to raise but we have to wait for interest rate to stabilise," HDFC Vice Chairman and Chief Executive Officer Keki M Mistry told PTI.
Asked whether the raising of funds will happen this fiscal or the next one, he said it is not yet decided.
HDFC is raising the money under the $1 billion ECB window for housing finance companies that the Reserve Bank allowed for funding affordable housing projects.
Last month, HDFC slashed interest rates by 0.25% on home loans. The new rates for HDFC home loans of up to Rs 75 lakh have come down to 10.25%, from 10.50%.
In its monetary policy review last month, RBI kept the short-term lending rate unchanged at 7.75%, while the cash reserve ratio (CRR) remained at 4%.
Earlier, speaking at an ICAI event, Mistry said interest rate is likely to remain stable in the current quarter but may see some moderation in April-June quarter.
"I don't see interest rate going down in the first quarter of this year as there is a huge demand for credit during the period due to various reason. It is usually busy season," he said.
Post April, RBI will have more options to bring down interest rate as credit off-take during that period will be low, he said.
--
CA. Rajesh Desai